South Africa has a mixed economy, the second largest in Africa after Nigeria. It also has a relatively high GDP per capita compared to other countries in Sub-Saharan Africa ($11,750 at PPP as of 2012). Despite this, South Africa is still burdened by a relatively high rate of poverty and unemployment, and is also ranked in the top 10 countries in the world for income inequality, measured by the Gini coefficient.
Unlike most of the world’s poor countries, South Africa does not have a thriving informal economy. Only 15% of South African jobs are in the informal sector, compared with around half in Brazil and India and nearly three-quarters in Indonesia. The OECD attributes this difference to South Africa’s widespread welfare system. World Bank research shows that South Africa has one of the widest gaps between per capita GNP versus its Human Development Index ranking, with only Botswana showing a larger gap.
After 1994 government policy brought down inflation, stabilised public finances, and some foreign capital was attracted, however growth was still subpar. From 2004 onward economic growth picked up significantly; both employment and capital formation increased. During the presidency of Jacob Zuma, the government has begun to increase the role of state-owned enterprises. Some of the biggest state-owned companies are Eskom, the electric power monopoly, South African Airways (SAA), and Transnet, the railroad and ports monopoly. Some of these state-owned companies have not been profitable, such as SAA, which has required bailouts totaling 30 billion rand ($2.3 billion) over 20 years.
South Africa is a popular tourist destination, and a substantial amount of revenue comes from tourism. Illegal immigrants are involved in informal trading. Many immigrants to South Africa continue to live in poor conditions, and the immigration policy has become increasingly restrictive since 1994.
Principal international trading partners of South Africa—besides other African countries—include Germany, the United States, China, Japan, the United Kingdom and Spain.
The South African agricultural industry contributes around 10% of formal employment, relatively low compared to other parts of Africa, as well as providing work for casual labourers and contributing around 2.6% of GDP for the nation. Due to the aridity of the land, only 13.5% can be used for crop production, and only 3% is considered high potential land.
In August 2013, South Africa was ranked as the top African Country of the Future by FDi magazine based on the country’s economic potential, labour environment, cost-effectiveness, infrastructure, business friendliness and foreign direct investment Strategy.
The FSI ranks South Africa as the 36th safest tax haven in the world, ahead of the Philippines but behind the Bahamas.
